Peabody deal creates £6bn housing giant in merger with Family Mosaic

The capital’s biggest housing association, the Peabody Trust, is merging with a rival under plans that could help bring about its £1.5 billion overhaul of Thamesmead in south-east London.

Peabody is combining with Family Mosaic in a move creating an association with 55,000 homes and 111,000 residents as well as £6 billion in assets.

The association’s move gives it a bigger balance sheet to raise funds for developments such as the regeneration of Thamesmead — a Sixties-built design disaster — where thousands of new homes are planned.

The merger also comes in a challenging climate when the Government has imposed annual rental cuts of 1% a year on housing association tenants, while wanting associations — who have traditionally rented homes — to provide more homes for sale. More mergers between the country’s 1500 associations are inevitable, insiders say.

The former head of the civil service, Lord Kerslake, will continue to run the enlarged body, which retains the Peabody name, while Family Mosaic boss Brendan Sarsfield will be chief executive.